UOB Q3 results get boost from wealth management, Companies & Markets

UNITED Overseas Bank (UOB) beat market estimates with an 8 per cent rise in third quarter net profit to S$1.12 billion from S$1.04 billion a year ago, boosted in part by a robust showing from its wealth management unit.

The bank’s net profit was above the S$1.07 billion average estimate off a Bloomberg poll of three analysts.

For the third quarter ended Sept 30, net fee and commission income rose 14 per cent to S$551 million, thanks to higher fees from wealth management and loan-related and credit cards fees, said UOB on Friday.

Income from wealth management surged 38 per cent to S$183 million – a strong showing, according to analysts – while income from loan-related fees and credit card fees were up 13 per cent and 14 per cent respectively from a year ago.

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Trading and investment income grew 67 per cent to S$310 million due to improved customer flows and gains from investment securities, said the bank.

Overall, UOB’s non-interest income for the third quarter stood at S$922 million, up 27 per cent from a year ago.

Net interest income grew 5 per cent to S$1.69 billion, driven by healthy loan growth of 8 per cent.

This is despite a dip in net interest margin by four basis points to 1.77 per cent amid declining interest rates and a competitive pricing environment, said UOB.

Loans-to-deposits ratio in the third quarter was higher at 89.3 per cent compared with 85.7 per cent in the year-ago period.

The bank’s total expenses in Q3 increased 14 per cent to S$1.15 billion, attributable to higher staff costs and revenue-related and IT-related expenses. Cost-to-income ratio increased marginally to 44.2 per cent.

Total allowances jumped 53 per cent to S$145 million in Q3, due to higher allowances for impaired assets, said UOB. Quarter-on-quarter, total allowances nearly tripled from the S$51 million recorded in Q2.

Non-performing loan (NPL) ratio in Q3 stood at 1.5 per cent, inching down from 1.6 per cent in the year-ago period.

For the nine months ended Sept 30, UOB posted record net earnings of S$3.34 billion – up 8 per cent from a year ago – beating Citi’s estimate by 3 per cent.

Total income rose 10 per cent to a new high of S$7.60 billion, led by broad-based loan growth, higher trading and investment income and steady fee growth, said UOB.

“We expect business sentiment to be weighed down by global economic headwinds,” said Mr Wee. “However, our regional footprint positions us well to capture the continuing investment flows as businesses diversify their supply chains into the region amid the ongoing trade tensions.”